Country-by-Country Reporting and Commercial Confidentiality

34 Pages Posted: 19 Nov 2015 Last revised: 20 Nov 2015

See all articles by Arthur J. Cockfield

Arthur J. Cockfield

Queen's University - Faculty of Law

Carl MacArthur

Western University - Faculty of Law

Date Written: November 18, 2015


Country-by-country reporting (CBCR) has been touted by the Organization for Economic Co-operation and Development (OECD) as a possible reform effort to inhibit aggressive international tax planning that leads to revenue losses for high-tax countries. Under current accounting, tax-law, and securities-law regimes, multinational enterprises (MNEs) are generally not required to report to domestic tax authorities or disclose to the public any significant financial information concerning their operations in foreign countries. CBCR would change this environment so that MNEs would be required to annually report financial information, including revenue, profit before income tax, and income tax paid in respect of every country in which they operate. Under the current OECD proposal, MNEs will be required to disseminate this information to tax authorities on a confidential basis and will not be required to disclose any information to the public. This article evaluates, from a transaction cost perspective, the claim that reporting such information on a geographic basis could harm firm competitiveness if MNEs were also required to disclose such information to the public or if the information were improperly disclosed by foreign tax authorities to rival firms. While the empirical evidence on this issue is mixed, the analysis suggests that CBCR will not unduly raise MNE transaction costs, in part because there are sufficient legal protections to guard against the revelation of sensitive commercial or trade secrets. In fact, CBCR represents a transaction-cost-efficient reform that could inhibit the use of revenue-reducing international tax-planning strategies. The article additionally discusses transition issues with respect to the implementation of different "maximalist" or "minimalist" approaches to CBCR.

Keywords: Foreign reporting, tax avoidance, privacy, base erosion and profit shifting, Organization for Economic Co-operation and Development, information exchange

Suggested Citation

Cockfield, Arthur and MacArthur, Carl, Country-by-Country Reporting and Commercial Confidentiality (November 18, 2015). Canadian Tax Journal/Revue Fiscale Canadienne, Vol. 63, No. 3, 2015, Available at SSRN:

Arthur Cockfield (Contact Author)

Queen's University - Faculty of Law ( email )

Macdonald Hall
Kingston, Ontario K7L 3N6 K7L3N6

Carl MacArthur

Western University - Faculty of Law

1151 Richmond Street
London, Ontario N6A3K7
United Kingdom

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